Louis Vuitton targets Middle East

10 February 2011

DUBAI: Louis Vuitton, the luxury specialist, is taking a nuanced approach in the Middle East, avoiding promotions and experimenting with innovative retail formats to engage shoppers.

The company recently launched a second "global store" in Dubai, selling goods from across its portfolio of watches, jewellery, leather products, eyewear, fashion and shoes.

"We took the decision to open the second global store at the height of the crisis confident of the existing level of business and of the future," Damien Vernet, the firm's general manager, Middle East and Africa, told Gulf News.

"In the region, especially in Dubai, the severe correction had much more of an impact on real estate and finance."

"Retail, at least as far as we are concerned, was not that affected. In fact it has had a more favourable impact in the mid- to long-term as it made Dubai more competitive again."

A key strength of the "global store" concept is meeting the needs of overseas visitors, who have particular expectations about the items they should be able to purchase.

"A big component of the business that we do in Dubai is to tourists," Vernet said.

Currently, Louis Vuitton boasts nine outlets in the Gulf and one in Lebanon, and could expand its number of "global stores".

"There's a strong justification to have one in practically every market of the region," Vernet added. "It would be logical to have one in Abu Dhabi, but the big question is finding the right location."

While promotions have proved a central feature in many categories during the downturn, Louis Vuitton ignored such a strategy in the Middle East and elsewhere.

"People were going crazy with discounts, especially at the big department stores in the US, by 70% [or] 80%. The buyer never knew what the real value was any more," said Vernet.

"Buyers realise that never going on sale has made our brand stronger; it was never discredited."

Wider factors also play a role in this area, as international trading conditions exert an influence.

"Our prices reflect the brand value and, of course, depending on where you are, the logistical costs, some times the cost of operation and the import duty," said Vernet.

"Here, the biggest variation has to do with the exchange rate - we are slightly more expensive than in Europe depending on the dollar-euro [ratio]."

"Compared with the same time last year, it's running in our favour, but we maintain a consistent level on pricing."

Another advantage Louis Vuitton possesses is directly managing its output, offering a high degree of certainty.

"The whole network is controlled by us; we can control the prices and never run the risk of a wholesaler or franchisee all of a sudden dumping some stock in the market," Vermet argued.

Louis Vuitton's established history has also imbued the brand with a clear heritage, making it comparatively resistant to short term trends.

"The recession has been really tough on some brands, but Louis Vuitton has been around for a long, long time," said Vermet.

"The Louis Vuitton bag that you buy today will still be with you in ten years, so much so it's almost seen as an investment. This meant we were relatively spared during the recession."

Data sourced from Gulf News; additional content by Warc staff